"I believe Damien (approriate name) Hirst should be imprisoned for fraud and gross indecency or some sort of of obscenity charge.He has made perversely large fortunes without creating the art himself. His fortune and assets shold be seized and donated to worthy causes. Genuine artists should combine their creative talents and lynch Damien Hirst and display his corpse in a gallery., or as the article suggests, at an auction to cut out the "serious" (serious money wasters) collectors."

That’s the first ‘blog’ comment on the Economist’s report of Hirst’s upcoming auction, which begins Monday.

The Economist piece is long , but the concept is simple – auctioning new work instead of selling it through galleries. Here’s the summary:

"To mount an auction of new work by a single artist and in such quantity—223 lots estimated to bring in at least £68m ($120m)—looks like bragging. Yet on September 15th, in the early evening, Oliver Barker, Sotheby’s youthful international specialist, will bring down his gavel on the first lot, a colourful triptych of butterflies and diamonds entitled “Heaven Can Wait” that is estimated to sell for up to £500,000. The auction is so big it will take two days to get through. The accompanying catalogue comes in three volumes, and is encased in its own slipcover. Such a sale has never been attempted before.

The report led me to wonder what would happen if some of Wellington’s annual Affordable Art offering was auctioned. The Economist describes the risk

"Only the brave sell at auction, for it is impossible to control who buys or what price they will pay. Some of Mr Hirst’s pieces will sell easily, especially if several bidders descend on the same work at once; others will be knocked down more slowly. Mr Hirst is flooding the market, but he hopes his prices will rise, thereby challenging one of the basic laws of economics. At the same time, he is breaking the art market’s traditional rules. For nearly 20 years his dealers have nurtured his career, placing his work in high-profile museums and in the hands of carefully selected wealthy collectors. "

What would a new issue auction do for the Wellington art market. Surely it would not remain vibrant if the galleries are starved. The Economist notes the threat to galleries in Hirst’s auction :

"By going down the auction-house route, Mr Hirst is now preparing to cut them out. “The final frontier protecting contemporary art galleries from the relentless encroachment of the auction houses has been emphatically breached,” wrote Roger Bevan, an art historian and critic, in an editorial in the Art Newspaper when the sale was announced last July."

The initiative reminds me of the debate over IPO and new issue share marketing. Company owners often toy with the idea of simply offering their shares on an exchange, to let the auction process set the price, because normal IPO procedures can leave great gains on the table for the buyers.

Issuers can also resent underwriters’ fees. Their new shares are priced to create excess demand and a premium for the lucky buyers. So what risk are they underwriting? The answer is that the fee is frequently just an endorsement or validation charge, not a fee for a genuine placement risk.

One reason why auction pricing is rarely used for new share issues is securities law. Prospectus rules assume that the offering will be vendor priced. They usually require documentation to go to buyers, whether buyers want it or not.

My Chapman Tripp colleagues and I included reform of this stupidity in a list of 15 "low hanging fruit" reforms we presented to a recent securities law conference.

To return to the art market – in case any Wellington gallery owner is worrying, on the bright side for you, Judith Tizard’s Bill to send underground the secondary market in art will probably lapse. It has not got to second reading. To continue past the dissolution of Parliament it must be included in a carry-over motion. Look for that not to happen with the Copyright (Artists’ Resale Right) Amendment Bill .

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Honesty is important on every level of being an artist. We saw a similar event occur with Salvador Dali.

peterquixote

September 15th, 2008

10:40 pm

the picture of John Key on placards looks pasty and awful.
For Gods sake, get offa the road you are wasting your time NATS.
I would go as far to say you are so early and you are making fools of yourselves.
You need me. Key is looking wishy washy. You need grunt.
Call quixote now. Win